Achieving net zero requires green hydrogen produced from renewable energy sources to decarbonize existing hydrogen applications and hard-to-electrify sectors such as steelmaking. Projections suggest a sixfold increase in global hydrogen demand by 2050. According to recent analysis by McKinsey and the Hydrogen Council, around 40 million tonnes per annum (mtpa) of hydrogen-equivalent fuels could be transported globally by 2035. The EU hydrogen strategy sets a target to import 10 mtpa of renewable hydrogen by 2030. To assess Europe’s medium-term import potential, this study estimates supply cost curves for green ammonia — a key hydrogen derivative — at various EU ports by applying a high-resolution PtX market model chain and considering a ramp-up based on announced and planned capacities across Africa and South America.

The study will utilise a first version of a Global PtX market model consisting of modules for 1) the GIS-based identification of suitable areas and the simulation of renewable profiles for those sites, 2) the cost-optimisation of specific Power-to-X commodities using PyPSA, 3) the identification of transport routes and calculation of transport costs 4) the projection of local demands and 5) the market model which simulations the supply and demand situation at export ports and estimates the supply cost curve and import ports.

The geographical scope are around 300 sites in countries from South America and Africa with strategies and project plans in place. Landlocked countries are excluded. The analysis is conducted for 2035. According to the IEA hydrogen production project database, 70% of the countries' announced projects plan to produce ammonia. Furthermore, the H2Global auction for ammonia led to a successful contract, underlining the relevance of green ammonia. Therefore, the analysis focuses on the market situation and supply cost curve estimation of green ammonia and ammonia for hydrogen end-use. The transport costs are considered using a detailed assessment of transport routes and shipping cost calculation.

Country-specific cost of capital scenarios for the projects are taken from a detailed calculation published recently in a Nature journal paper. The paper provides cost of capital rates for a public de-risking and a private commercial scenario. The GIS-based analysis of the most suitable areas dedicated to PtX export capacities uses more than 30 criteria. Regions suitable and needed for producing hydrogen for projected local use for green fertiliser or steel production, or for supplying haul aviation and shipping with renewable Power-to-X fuels will be excluded for the purpose of exporting hydrogen. Production volumes per country are defined based on announced projects, leading to a global supply curve before trade. Detailed transport cost modelling is used to derive port-specific delivered supply curves.

The quantified, temporally resolved supply curves at European ports of this study can be used as an input for further detailed analysis down the supply chain. Furthermore, the results can be used to analyse the competition among different hydrogen supply routes (import vs. production in Europe) and their respective infrastructure needs for the European energy system.